eBooks & Value

Last week, Amazon.com and publishers started going head to head with the business model that Amazon.com has set up for their Kindle eBook store. With the recent release of the Apple iPad, new alternatives have been opened for publishers. With it, there has been a flood of problems and statements from all edges of public opinion about not just the power that Amazon.com seems to be able to field, but also to the very nature of the place of e-books.

The background of the story lies with Amazon’s preference for a lower price for an e-book on their Kindle device. Typically starting at $9.99, one of the major publishers, Macmillan, went to Amazon with new proposals for how to sell their books. From how I understand it, it would introduce a graduated pricing system, starting their new books at $15.99 and gradually dropping the price as demand falls away. This is something that’s already pretty well established in the book industry, with hardcovers of the really big books starting off at $25 to $30, before dropping down to trade paperbacks (Around $15 each) going to or going directly to mass market paperbacks, generally around $7.99 each. There’s a new, taller book (I’m not sure what it is called) that typically runs around $9.99 per copy.

A big part of the issue is that profits that go to the publisher, and eventually, the author, have been cut into, as it is a cheaper way to distribute the book. This made a lot of sense for Amazon.com, because after purchasing a multiple hundred dollar device, because it helps the more economically minded consumers actually use the device. While it’s just a little more than the mass-market paperback, buying a new release book that would normally be $30, for something between $9.99 and $15.99, makes a lot of sense, especially for the consumers who really matter – the ones who buy hundreds of books a year.

This makes good for the consumer, for sure, but it does impact other elements down the publishing line, and indeed, the bookselling line. Pundits, for years, have been predicting the demise of brick and mortar bookstores with the introduction of online bookstores such as Amazon.com, and with the slowly growing rise of e-books and the Kindle, it’s coming back, and for good reason: bookstores are getting hurt by this new competition. I recently was laid off from Borders when they closed down 200 of their smaller stores in order to consolidate to their larger ones. While there are other issues at stake there, it is clear that people buy far more off of the internet than from in a store. When given a chance, I’ll do the same thing – I can pick up other books cheaper from Amazon’s used bookstore, but also from used bookstores around the area.

This is all part of a larger consumer culture that seems to be pushed along by giants such as Amazon.com, Walmart, Home Depot and other stores: consumers want to pay the lowest possible price for what they want. Bigger stores can make that happen, and we’ve been conditioned to respond to that sort of thing. One of the problems, however, is in how the consumer values the product that they’re intending on buying, and how much the creator, whether it’s a publisher or manufacturer, and there’s a growing gap that’s pushed forward by these larger stores. It’s good for the consumer and good for these stores in particular, but it’s not good for the manufacturer of whatever good you’re trying to buy.

I’m not sure that that is a good thing, because eventually, the manufacturer’s ability to produce will have to be decreased due to lack of profits. In the publishing industry, forcing a publisher to take a smaller cut for their books means that less money could make it to the author, who will either need to sell more books or negotiate a better deal with their publisher. This is even more of a problem when stores, such as Amazon.com sell a majority of your books, and where your entire publishing company has been taken off, as is the case with Macmillan.

I think part of the issue is addressing just how much a publisher should value their e-books, and making customer expectations meet that. Books have a lot that go into them, from editing, layout, marketing and so on, and in a consumer culture where expectations towards lower and lower prices are pushed as well, that particular detail is going to be lost. It would seem that the publishing industry has reached a level where they don’t want to move any further.

How exactly does one value an e-book? I can say with certainty, that I will typically go with the price on the back of the book for a majority of the books that I purchase in a year. I try to find something with a discount, and made use of my employee discount, but once purchased, I know that the book was mine. When it comes to e-books, there are a whole lot of other options, especially with Amazon.com, which essentially sells you a license for the book, which can be revoked at any point. (This happened, somewhat ironically, with the book 1984, recently). This is the same with music and software, and has been around for a while, so I’m not sure why everyone is raising a fuss about it now. Thus, people purchase a product that they cannot transfer or resell as they could the physical product. Even if it is cheaper, I think that even $9.99 isn’t a good value for the consumer, as opposed to my feeling that $25 is a very good value for a physical book in some instances.

Who’s at fault for this? Well, everybody has blamed everybody. The publishers have been blamed for distrupting Amazon’s plans, the consumers have been blamed for wanting low prices, the publishers for demanding too much, and the authors have been blamed for whining and complaining about this. This has always been an issue with business, because there are numerous people who get different cuts, and everybody wants a larger piece of the pie. Personally, I think that the publishers are well within their rights to set the books at whatever price they want – how they value their product – because they are primarily in charge of the creation. Amazon has just enough leverage to force their own prices on the publishers because they account for large portions of the sales. Authors, I think are largely blameless in this, because they simply have no control over how these books are sold, marketed and edited. Consumers, I think, need to have a more realistic value in their heads for what they buy.

The bottom line that I see here is that this row isn’t the end, but in this instance, it’s not unreasonable for a graduated pricing system, as publishers want. While Amazon.com is looking to entice people to their Kindle, I think that there is sufficient momentum on their part for moving people to digital formats. People aren’t necessarily going to be scared away by higher ebook prices, because these higher prices will still be better than the alternatives. Just as casual readers will wait for a year for their favorite author’s book to come out in paperback, the buyers who really matters, the repeat customers who buy a larger volume of books will buy the books as they come out, generally at the regular price, or at the sales price that drops that just a bit. Unfortunately, as Amazon.com has moved to punish a publisher, the authors have been caught as collateral damage.

This, more than ever, just reinforces my desire for a hardcopy book, rather than an e-book. The tactile crap that a lot of people go on about just doesn’t figure into it. When I buy a book at a bookstore, that is my property, not just a piece of data that can be revoked by a company as it sees fit, and I can sell it and return my losses as I need. Plus, I don’t need to worry about a battery for any of the books that I own.

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